Smart checkout technologies will process $387bn in transactions by 2025, up from just $2bn this year, according to Juniper. And Berg predicts the number of cellular IoT devices in retail will hit 116.6m by 2024.

The Juniper study looked at the value of transactions processed by smart checkout technologies, where the fixed checkout process is replaced by a frictionless model.

Smart checkout technologies provide simpler user experiences by removing traditional checkouts, embracing a just-walk-out approach. The rapid growth will be driven by retailers seeking sustainable business models in the wake of the Covid-19 pandemic. However, the pandemic’s impact is only an acceleration of a long-term decline in the fortunes of traditional retail.

The report found that, while the growth in adoption is dramatic, innovation will be limited to the convenience segment, where product lines are simpler and implementation costs are lower. These rollouts will also be limited to larger retail chains that can afford the significant investment costs involved.

The research found the use of AI, including smart checkout systems and chatbots, will be critical in ensuring retailers can deliver a compelling omnichannel experience to consumers. The drive for efficiency will lead to investments of over $23bn by retailers in AI by 2025, up from just over $5bn in 2020.

“To compete with ecommerce disruptors who heavily rely on AI, traditional retailers must adopt AI rapidly to boost efficiency,” said research co-author Nick Maynard. “If they fail to do so, they will face a highly commoditised retail market with an outmoded, uncompetitive business model.”

The research found the use of RFID for tracking was essential to enabling analytics within the retail supply chain. As retailers need greater efficiency, analytics are crucial, but they are only as good as the data they are based on. This need for standardised data for analysis will propel RFID’s deployment, driving RFID shipments for retail to over 32 billion in 2025, up from nine billion in 2020.

• The number of cellular IoT connections in the retail industry reached 72.4 million worldwide in 2019, according to research from Berg Insight. Cellular IoT technology enables devices such as PoS terminals, ATMs, digital signs and ticketing machines to be used at locations where fixed line connectivity is unavailable or impractical.

The technology has a more transformational effect on markets such as vending and parking, where machine operators need to reorganise their operations to benefit from the availability of real-time information.

Berg forecasts that the number of cellular IoT connections in the global retail industry will grow at a compound annual growth rate (CAGR) of 10.0 per cent during the next five years to reach 116.6 million connections in 2024. Shipments of cellular IoT devices for retail applications will at the same time increase at a CAGR of 6.1 per cent from 31.6 million units in 2019 to 42.4 million units in 2024.

PoS terminals constitute the largest device segment and accounted for 91 per cent of all cellular IoT connections in the retail industry at the end of 2019. The market for wirelessly connected PoS terminals is however relatively mature, and most of the market growth is driven by the increasing use of electronic payments in emerging markets.

“The multi-space parking meter segment was one of the first vertical markets to embrace cellular IoT connectivity and has today reached the highest connectivity penetration of 60 per cent,” said Johan Fagerberg, principal analyst at Berg Insight.

In recent years, cellular connectivity has also found its way into the single-space parking meters market, which has become one of the fastest growing segments. Berg expects that the vending machine segment will present a major opportunity for wireless connectivity in the long term.

“Today only 4.2 million of the world’s 15.0 million vending machines are online,” said Fagerberg. “Every vending machine will eventually be connected, but costs for the wireless IoT hardware and subscriptions still need to come down further before this vision becomes reality.”